Tax Planning: Various Ways of Saving Income Tax

Income tax is the most concerned thing for large numbers of people across India. Most of us buy insurance policies and various other financial products in a hurry only to save tax. Income tax savings should not be done only for tax saving. It should be in line with your financial goal also. There are a number of ways of saving income tax. Our aim should not only to save tax but also to create wealth at the same time. Hence, it is wise to plan income tax savings at the start of financial year. Here are the ways of saving income tax.

Hence, here are the ways of saving income tax.

Interest from Savings Bank Account

Under section 80TTA, the interest accrued in the savings bank account is exempted from income tax. The amount is restricted to Rs 10000.

Home Loan Interest

The interest component can be used to claim for deduction under Section 24B if the house is ready and in your possession. The maximum amount for exemption is Rs 2 lakh. If you have rented out the house, the entire interest can be claimed as a deduction from the rental income.

Deductions under Chapter VI-A

Accrued Interest is Taxable in the year in which it has accruedNot ApplicableNot ApplicableA sum of Rs 40,000 can be exempted for the medical treatment of certain chronic and protracted diseases such as Cancer, full blown AIDS, Thalassaemia, Haemophilia etc. – For more visit this link.

Stamp duty, registration fee and other expenses for the purpose of transfer of such house property is also eligible.Not ApplicableNot Applicable A maximum of Rs 1.5 lakh can be deposited during the financial year.9.2% for FY 2015-16Nil Limit is up to Rs 25000Not ApplicableNot Applicable

Under Section 80DD

The limits were fixed at Rs 50,000. Further, the limit for a person with a severe disability is one lakh rupees.

Not Applicable

Not Applicable

Under Section 80DDB

15

Medical Expense on Specified Disease (Sr. Citizen, Other)

Not Applicable

Not Applicable

Under Section 80G

16

Donation

Donations to charitable organizations are tax-free. The total deduction for donations cannot exceed 10 percent of your gross total income.

Not Applicable

Not Applicable

Under Section 80E

17

Higher Education (Interest On Loan Only)

The loan should be for pursuing higher education for SELF, SPOUSE and CHILDRENS for full-time studies.

Not Applicable

Not Applicable

Under Section 80U

18

Self-Handicap (Severe Disability, Non-Severe)

Limit of deduction in respect of a person with disability is Rs 125000

Not Applicable

Not Applicable

Here are the income tax deduction limit for the financial year 2017-18.

If Taxable income is up to Rs 250000, no income tax

For Taxable income of Rs 250000-500000, income tax is 5%

If Taxable income is Rs 500000-1000000, income tax is 20%

If Taxable income is above Rs 1000000, income tax is 30%

Education Cess: The amount of income-tax shall be further increased by education cess calculated at the rate of 2% of such income-tax.

Secondary and Higher Education Cess: The amount of income-tax and the applicable surcharge, shall be further increased by secondary and higher education cess calculated at the rate of 1% of such income-tax.

Rebate is available to a resident individual if his total income does not exceed Rs. 3,50,000. The amount of rebate shall be 100% of income-tax or Rs. 2500, whichever is less